Tassal Group (TGR)

JPMorgan has an “overweight" recommendation on
Tassal
and a $3.70 price target, with the company no longer tied to “the vagaries of the volatile export salmon price".

JPMorgan found data from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), together with industry feedback, revealed the domestic salmon market is about 10 per cent undersupplied.

Global salmon prices used to dictate whether domestic competitors exported production or tried to sell domestically, but demand and therefore pricing is much more favourable in the domestic market than the export market.

“This means that all domestic salmon producers are now able to move production in Australia rather than exporting ... the global salmon price no longer influences Tassal’s earnings," JPMorgan said, adding that market dynamics could remain favourable until the 2018 financial year, given the three-year harvest cycle of salmon.